Sebi proposes to rationalise penalties for settling ongoing cases

India's markets regulator on Friday proposed revamping its framework ​for settling cases ​in which market participants may have violated securities ​laws to simplify the process, reduce litigation and encourage quicker resolution of enforcement cases. Here are more details:

* The proposal replaces the existing settlement formula ‌with a simplified ⁠calculation ⁠linked to statutory minimum penalties and factors such as the stage ​of proceedings, prior regulatory action, gravity of violations, and aggravating and mitigating circumstances.

* ​The regulator said that, with these tweaks, the average settlement amount for an infraction would be about four times the ​regulatory penalty, compared with eight times ⁠at present.


* ‌SEBI proposes allowing rejected settlement applicants to reapply ​at ​later stages of proceedings, including before a securities ⁠tribunal or the Supreme Court, subject to a ​20% additional settlement amount if the reasons for ​the earlier rejection no longer exist.

* The regulator has proposed limiting non-monetary settlement terms in adjudication cases, while retaining measures such as voluntary debarment or suspension in serious cases and for repeat offenders.

* In cases involving financial misstatements or ‌diversion of funds, applicants may be required to disclose the allegations to investors as well as ​stock exchanges ​and to restore ⁠diverted funds with interest as part of settlement terms.

* The draft framework introduces a fast-track settlement route for specified violations and cases ​involving settlement amounts of up to 1 million rupees ($10,479.43), while reducing charges for refiled applications.

* Public comments on the proposals have been invited until September 4, 2026.